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AMA KITCHEN FURNITURE MARKET MARCH 2001

This report covers: kitchen furniture, sinks, worktops,Flat-Pack, Rigid Units, historical market development, analysis of market size, by value 1990-2000, market forecasts 2001-2004,economic situation, house building, house moving activity, consumer confidence, price competition, population mix changes, growing influence of design and style changes, increases in the number of second or third time buyers, growing ownership of a greater number of kitchen appliances

Companies covered include: Hygena / Schreiber, Bernstein, PJH/Ram Kitchens, Symphony, Magnet, MKD, Moores Furniture Group,Astracast By Jacuzzi, Leisure, Carron Phoenix, Franke, Teka, Blanco, Bushboard Parker, Orama Fabrications, Perstorp,

Key Areas
Executive Summary
Table of Contents
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KEY AREAS

AMA Research has published the Sixth Edition of the 'UK Domestic Kitchen Furniture Market Report 2001'. The report incorporates substantial original industry research and represents a comprehensive and up-to-date review of the market.

Product sectors covered in the report include:

KITCHEN FURNITURE
SINKS
WORKTOPS

Recovery from the slowdown during 1998/1999 has been moderate, with the market benefiting from growing consumer confidence, a buoyant housing sector. The market is currently valued at around £1 billion at MSP, with medium term prospects relatively optimisstic.

This report reviews developments within the industry, with emphasis on both QUANTITATIVE and QUALITATIVE market assessment. The report contains over 90 pages of ORIGINAL research on the UK Domestic Kitchen Furniture Market and provides incisive and thought-provoking views on its future development.

Key areas covered in the report include:

THE MARKET

Total Kitchen Furniture Market - market background, product mix by value.
Furniture and Worktops Market - historical market development, analysis of market size by value 1990-2000, market forecasts 2001-2004.
Sinks Market - market developments in recent years, analysis of market size by value 1990-2000, market forecasts 2001-2004, market analysis by material type and current trends.
Factors influencing Market Development - economic situation, house building and house moving activity, consumer confidence, price competition, population mix changes, growing influence of design/style changes, increases in the number of second/third time buyers, growing ownership of a greater number of kitchen appliances etc.
Fitted & freestanding kitchens furniture – increase in demand of modular furniture, IKEA effect.
Imports and Exports - developments in import and export levels 1988-2000, factors influencing limited recovery in imports and downturn in exports, changes in import shares among main countries of origin, future trends in imports and exports.
Fitted Kitchen Furniture Ownership - changes in ownership levels 1981-2000, factors influencing current and future ownership levels eg. new house building, market penetration in public sector housing; forecast penetration levels.
Kitchen Appliances - annual value sales by built-in and free standing products, mix by type of appliance, influence of appliance sales in fitted kitchen furniture market.

PRODUCTS

Flat-Pack/Rigid Units - quality levels of flat-pack kitchens, factors affecting mix between flat-pack and rigid kitchens, market share of flat-pack/rigid kitchens, assembly methods of kitchen furniture.
Trends in Design/Materials in Kitchen Furniture – Increasing overlap between designs from different countries, factors influencing design trends eg. ‘IKEA effect’ lifestyle considerations, greater consumer awareness; emphasis on functionality, quality and features, trends in colours and finishes, long term trends in styles and designs, etc.
Trends in Design/Materials in Worktops - share estimate of laminates, improvements in laminate products, colour/pattern trends in worktops, growth of non-laminate materials such as solid surfaces, wood, stone, stainless steel advantages/disadvantages, new product developments.
Trends in Design/Materials in Sinks - historic and current developments in materials, advantages/disadvantages, current and future trends, material share estimates, factors influencing material trends eg. new materials, product development, fashion influences, popular colours, trends surrounding other kitchen products. Increasing share of one-and-a-half bowl size.
Developments in the Components Market – Factors influencing trends in size of the retail assembly market, strengths and weaknesses of this type of kitchen market eg. changes in kitchen design.

DISTRIBUTION/SUPPLIERS

Distribution Channel Shares - analysis of shares by value, trends/developments in shares eg. Changes in DIY multiple sector,
Role of Distributors - importance of distributors in kitchen furniture market, use of fewer distributors by some major kitchen furniture manufacturers, review of major national distributors.
Analysis of Supply Structure - supplier market shares, recent developments in supplier shares.
Profiles of Leading Suppliers - furniture, worktops, sinks suppliers, market position, analysis of activities, financial information etc.

KEY MARKET INFLUENCES/FUTURE PROSPECTS

Housing Market - analysis of developments in new house building and house moving activity, influence of housing trends on kitchen furniture market.
Population Profile - analysis of changing profile, implications for kitchen furniture sales. Personal Disposable Income and Savings - developments in ratios and impact on consumer durable purchasing. Households - stock of dwellings/household structure, consequences for kitchen furniture sales.

Future Prospects - key factors influencing future market developments, performance of the economy, housing market, consumer confidence, market factors, future growth prospects.

EXECUTIVE SUMMARY

The Kitchen Furniture market experienced a slight decrease in sales during 1999, but during 2000 the market recovered and steady growth has been predicted for 2001-04, as outlined in the chart below.

Kitchen Furniture and Worktops Market 1990-2004 By Value (MSP £m)

market graph

Source: AMA Research/Trade Estimates

The kitchen furniture market remained flat and subdued through 1998 and 1999 mainly as a result of a downturn in the economy due to concerns over generally poor global economic performances and the Asian crisis, together with increased interests rates, resulting in low consumer confidence. However, the market’s performance during 2000 saw some improvements, as house prices and the housing market were generally beginning to show improvement and the buoyant levels of consumer spending supported the kitchen market, resulting in substantial growth over the last year.

There are currently concerns over the deterioration of the US economy and the effect this may have on the UK economy and the home improvements market. However, assuming that the effects are not significantly detrimental, 2001 should see growth of around 3 percent for the kitchen furniture market.

In terms of mix, the kitchen furniture market is comprised of furniture, sinks and worktops. Kitchen furniture is by far the largest sector accounting for around 80 percent of the market in value terms, while sinks and worktops each account for around 10 percent.

Imports of kitchen furniture have been very slowly declining since the peak of 1997 and in historic terms, levels remain very low. In contrast, exports have deteriorated since 1996, mainly as a result of the strength of Sterling impairing the competitiveness of UK products in most overseas markets.

The kitchen furniture market is in the mature stage of its product lifecycle, resulting in replacement demand accounting for an increasing proportion of sales at around 56 percent. A more experienced and knowledgeable customer base is looking for additional product benefits, resulting in sales of higher average values. Sinks and worktops are following a similar trend, although some are purchased as a less expensive alternative to replacing the whole kitchen. Interior decor television programmes are providing an additional inspiration to consumers to be more imaginative in their kitchen refurbishment plans.

In contrast to many continental European countries, flat-pack continues to dominate sales of kitchens in the UK market, accounting for around 76 percent of sales. Although there is a general trend to trading-up it is unlikely that this will benefit the rigid kitchen market to any significant extent, mainly due to the current quality of flat-pack products, the IKEA effect and the increase in demand for modular furniture. It is unlikely that this mix will change dramatically in the longer term, though in times of recession, people may trade down to flat-pack ranges targeted at the bottom end of the market.

In terms of design, there is a strong trend towards minimalism and continental designs. Door fronts are becoming increasingly plain with square designs and lighter woods are still dominating. There is also a current trend developing in the metallic 'high tech' look, which is increasingly introducing stainless steel and aluminium into kitchen design. Kitchens with ‘clean-lines’ are popular and are installed in combination with many accessories such as wicker baskets, pilasters and spice drawers. In general, the total kitchen is becoming more open in design terms, with increasing growth in free standing and modular units.

Consumers are increasingly seeing the worksurface as an element of the kitchen’s design as opposed to merely a functional product, nevertheless price remains an important factor when making the purchasing decision. There has been some growth in sectors other than laminates, including solid surfaces as people trade up. Solid surfaces enable the installation of fully integrated sinks, although the substantial price difference between solid surfaces and laminates is resulting in some use of a combination of the two, as opposed to the sole use of solid surfaces. Other popular worktop materials include granite, which has grown substantially, wood, marble and stainless steel which is receiving positive results due to current fashions.

Sinks are made in a variety of materials, with stainless steel still leading the market in volume terms, accounting for 60 percent of the market. The other major sector is composites which take 36 percent, with others such as ceramic and clay accounting for 4 percent. Stainless steel has experienced a resurgence in demand, due to the popularity of the high-tech look in kitchens and demand for stainless steel kitchen appliances.

In terms of designs, under-mounted sinks are still a niche sector although further growth has been indicated. Due to the increase in demand for modular furniture and appliances, modular sinks are starting to complement this trend and there are a far greater range of shapes and sizes now available.

The kitchen components industry is likely to benefit from the current and on-going growth in assembling retailers, selling own-brand component kitchens.

There have been substantial changes in the channel mix for the distribution of kitchen furniture, with a decline in the share of DIY multiples, due to the withdrawal from kitchens by Homebase.

Share by the discount/furniture warehouses sector has seen some growth due to improved performances from MFI and the overall positive performances from Magnet and IKEA, with the sector overall accounting for an estimated 36 percent.

There have also been some changes in shares held by the leading manufacturers in the kitchens market, with Spring Ram losing share, due to delisting of kitchens from Homebase, and the subsequent break-up of the kitchen brands between PJH and Design Academy. Companies that have been more buoyant include Hygena/Schreiber, Bernstein, Magnet, MKD and Moores.

Assuming that the UK economy is only marginally affected by the deterioration of the US economy, our forecast for 2001 and beyond is for steady growth in all of the kitchen furniture sectors, due to a combination of factors, including growth in the housing market, demographic changes, improvements in design and technology, growth in replacement market and underlying increases in housing stock, underpinned by buoyant consumer confidence levels.

TABLE OF CONTENTS

UK Domestic Kitchen Furniture Market Report 2001
1.	INTRODUCTION	7
2.	SUMMARY	8
3.	ECONOMIC ENVIRONMENT	12
3.1	GENERAL	12
3.2	GDP	12
3.3	INTEREST RATES AND INFLATION	13
3.4	UNEMPLOYMENT	13
3.5	HOUSEHOLD CONSUMPTION & SPENDING	13
3.6	STERLING	14
4.	THE UK FURNITURE MARKET	15
4.1	DEFINITION AND MARKET SIZE	15
4.2	CONSUMER CHARACTERISTICS	17
4.3	PRODUCT MIX - OVERALL FURNITURE MARKET	18
4.4	THE UK KITCHEN FURNITURE MARKET	21
4.4.1	Background	21
4.4.2	Market Definition	22
4.4.3	Market Size	22
4.4.4	Fitted and Non-Fitted Kitchen Furniture	33
4.5	IMPORTS AND EXPORTS	36
4.5.1	Imports	36
4.6	HOUSEHOLD OWNERSHIP	37
4.6.1	Socio-Economic Factors	41
4.7	KITCHEN APPLIANCES	43
4.7.1	Product Trends	46
4.7.2	Distribution	50
5.	PRODUCT ANALYSIS	53
5.1	INTRODUCTION	53
5.2	PRODUCT DEFINITIONS	53
5.3	KITCHEN FURNITURE: FITTED AND NON FITTED	54
5.4	KITCHEN FURNITURE: FLAT-PACK/RIGID UNITS	55
5.5	METHOD OF ASSEMBLY	58
5.6	DESIGN/MATERIALS	60
5.6.1	Kitchen Furniture	60
5.6.2	Worktops	63
5.6.3	Sinks	66
5.6.4	Components	70
6.	DISTRIBUTION CHANNELS	72
6.1	OVERALL SHARE	72
6.2	DISCOUNT/FURNITURE WAREHOUSE	73
6.3	DIY MULTIPLES	74
6.4	KITCHEN SPECIALISTS	76
6.5	BUILDERS MERCHANTS/CONTRACT/HOUSE BUILDERS	78
6.6	OTHERS	79
6.7	DISTRIBUTORS	80
7.	SUPPLIERS	82
7.1	OVERALL SHARE	82
7.2	KEY SUPPLIERS OF KITCHEN FURNITURE	83
7.2.1	Hygena/Schreiber	83
7.2.2	Magnet	84
7.2.3	Bernstein	85
7.2.4	PJH/Ram Kitchens	86
7.2.5	Symphony	87
7.2.6	Moores Furniture Group	87
7.2.7	Gower	88
7.2.8	MKD	88
7.2.9	Imports	89
7.2.10	Others	90
7.3	SINKS	91
7.3.1	Introduction	91
7.3.2	Astracast By Jacuzzi	91
7.3.3	Leisure	92
7.3.4	Carron Phoenix	93
7.3.5	Franke	93
7.3.6	Teka	94
7.3.7	Blanco	94
7.4	WORKTOPS	94
7.4.1	Introduction	94
7.4.2	Bushboard Parker	95
7.4.3	Orama Fabrications	95
7.4.4	Perstorp	96
8.	KEY MARKET INFLUENCES	97
8.1	THE HOUSING MARKET	97
8.1.1	New Housebuild	97
8.1.2	House-Moving Levels	98
8.1.3	Value Of Output - New Work And RMI	100
8.2	POPULATION PROFILE	101
8.3	EMPLOYMENT/UNEMPLOYMENT	103
8.4	INTEREST RATES	103
8.5	DISPOSABLE INCOME LEVELS AND SAVINGS	104
8.6	HOUSEHOLDS	105
9.	FUTURE PROSPECTS	108
TABLES AND CHARTS
CHART 1:	KITCHEN FURNITURE AND WORKTOPS MARKET 1990-2004 BY VALUE (MSP £M)	8
TABLE 2:	THE UK MARKET FOR DOMESTIC FURNITURE 1994-2001 (£M MSP)	16
TABLE 3:	AVERAGE WEEKLY EXPENDITURE ON HOUSEHOLD GOODS AND FURNITURE BY AGE OF HEAD OF HOUSEHOLD (£'S) 1998/1999	17
CHART 4:	UK MARKET MIX OF FURNITURE 1990, 1997 & 1999	19
CHART 5:	FITTED AND NON-FITTED FURNITURE 1999 - percent SHARE BY VALUE	20
TABLE 6:	UK KITCHEN FURNITURE AND WORKTOPS & SINKS MARKET 1990-2004 - BY VALUE (MSP £M)	23
CHART 7:	PRODUCT MIX IN THE KITCHEN FURNITURE MARKET 2000 - BY VALUE	24
TABLE 8:	UK KITCHEN FURNITURE AND WORKTOPS MARKET 1990-2004 - BY VALUE (MSP £M)	25
TABLE 9:	UK KITCHEN SINK MARKET 1990-2004 - BY VOLUME & VALUE	30
CHART 10:	UK DOMESTIC SINKS MARKET - MATERIAL MIX BY VOLUME - 2000	31
CHART 11:	MIX OF FITTED & NON -FITTED KITCHEN FURNITURE - 2000 BY VALUE	35
TABLE 12:	FITTED AND NON-FITTED KITCHEN, BEDROOM AND BATHROOM FURNITURE MARKET SHARE BY VALUE 1999	35
CHART 13:	UK KITCHEN FURNITURE IMPORTS AND EXPORTS 1988-2000 (£M MSP)	36
CHART 14:	HOUSEHOLD OWNERSHIP LEVELS OF FITTED KITCHEN FURNITURE 1981-2004	38
CHART 15:	percent MIX OF FITTED KITCHEN SALES BY PURCHASING SECTOR 2000 BY VOLUME	40
TABLE 16:	UK DOMESTIC APPLIANCE MARKET SIZE £M MSP (1990-2003)	44
TABLE 17:	PRODUCT MIX OF KITCHEN APPLIANCES 2000 BY VALUE	45
TABLE 18:	UK COOKING APPLIANCE MARKET BY VOLUME	47
TABLE 19:	UK LAUNDRY AND DISHWASHER MARKET 1999 BY VOLUME	48
TABLE 20:	UK REFRIGERATION MARKET BY VOLUME	49
CHART 21:	DISTRIBUTION OF KITCHEN APPLIANCES BY CHANNEL 2000	51
CHART 22:	MIX OF FITTED & NON -FITTED KITCHEN FURNITURE - 2000 BY VALUE	55
CHART 23:	FLAT-PACK/RIGID FURNITURE SHARE BY VALUE 2000	57
CHART 24:	ASSEMBLY METHODS OF FITTED KITCHEN FURNITURE	59
CHART 25:	KITCHEN SINK DESIGNS: MARKET SHARE BY VOLUME 2000	69
TABLE 26:	KITCHEN FURNITURE MARKET : DISTRIBUTION CHANNEL SHARE 2000 BY VALUE	72
TABLE 27:	DISTRIBUTOR SHARE BY PRODUCT MARKET 2000	80
TABLE 28:	MARKET SHARES OF MAJOR KITCHEN FURNITURE SUPPLIERS 2000 BY VALUE	83
TABLE 29:	HOUSEBUILDING COMPLETIONS (000'S DWELLINGS) 1990-2002 IN GB	97
TABLE 30:	NUMBER OF PROPERTY TRANSACTIONS IN ENGLAND AND WALES 1990-2002	99
TABLE 31:	VALUE OF NEW UK HOUSING OUTPUT AND RMI OUTPUT (£M) 1990-2000	100
CHART 32:	AGE DISTRIBUTION OF THE RESIDENT UK POPULATION 1998 ('000)	101
CHART 33:	NUMBER OF EMPLOYEES IN EMPLOYMENT GB - JUNE 1981-98 (MILLIONS)	103
CHART 34:	INTEREST RATES AND INFLATION (RPI) FROM 1990-2003	104
CHART 35:	PDI & SAVINGS RATIO	105
TABLE 36:	STOCK OF DWELLINGS GREAT BRITAIN - 1983-2000	106
CHART 37:	MIX OF PEOPLE PER HOUSEHOLD 1971-1998	107

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Last updated by Jacob van Eldik 20th March 2001

UK Domestic Kitchen Furniture Market Report 2001

TABLES AND CHARTS